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28 Aug 1212 Taxpayer presently entitled to income of Liechtenstein Foundation - Murray

The AAT has held that the taxpayer, a resident of Australia from 1999 to 2007, was presently entitled to the income of a Foundation established in Liechtenstein in 1995. Further the AAT held that the taxpayer had failed to discharge the onus of proof that the Commissioner's estimate of the amount of that income ($25,927,521) was excessive. The Commissioner also imposed shortfall penalties of $11,282,207.29.

The information about the taxpayer's financial affairs came to the ATO's attention after an employee (Witness A) of LGT Bank in Liechtenstein AG, a financial institution in Liechtenstein, unlawfully took an electronic copy of a great number of records of a subsidiary of that bank, LGT Treuhand AG in November 2002. Witness A provided the Commissioner with three compact discs that contained information about LGT Treuhand’s procedures and financial and other information that related to Australian residents, one of whom was the taxpayer.

The taxpayer currently resides in Singapore, and failed to give oral evidence before the AAT. Virtually no evidence was provided about the establishment of the Foundation or its financial affairs.

The AAT said at para 55:

"It is certain that the [Commissioner's] assessments are not correct; but the [taxpayer] has not shown what his taxable income actually was. On the view I take of the matter he was presently entitled to the income of the Foundation. He has made no attempt to show what the actual income of the Foundation was during any of the relevant years. This is not a case where all the relevant facts are known and the resolution of the proceedings depended upon the legal analysis of those facts. It is a case where the [Commissioner] has proceeded upon an intelligible basis to make an estimate of taxable income on the material available to him in circumstances where the [taxpayer] has chosen not to provide any information about the actual income of the Foundation. It is undoubtedly the case that the [Commissioner's] assessments are not correct but the [taxpayer] has not shown the taxable income on which tax ought to have been levied. It follows that he has not shown that the assessments are excessive."

Murray and FCT (No. 3) [2012] AATA 557 (AAT; Hack SC DP; 24 August 2012).


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